14/07/2008: A Customs Tariff to BEC 2007 correspondence has been revised in Table 3.2 'Customs Tariff correspondences to International Trade Classifications'. Customs Tariff 2710116925 is now linked to BEC 2007 item 321. As a result, data in Table 2.4 'BEC Changes to Merchandise Trade Imports 2005-06' has been revised.

This information paper outlines statistical impacts resulting from changes to the classification of Australian import and export statistics. An earlier information paper, Changes to international trade statistics, July 2008 (cat. no. 5368.0.55.009) released on 10 January 2008 provided preliminary information to these changes.

The United Nations has issued an update to the Standard International Trade Classification (SITC) and has issued a new concordance between the Broad Economic Category (BEC) and the Harmonized System 2007 which is the international classification used to classify goods as they cross the Customs frontier. In addition, the ABS maintains two classifications, the Balance of Payments Broad Economic Category (BoPBEC) and the Balance of Payments Commodity of Exports (BoPCE), which will be impacted by the update to SITC.

Although there has not been any change to the categories in the BEC, BoPBEC and BoPCE classifications, there has been change to some of the detailed commodities classified within these categories.

For ease of explanation, the description of the current and revised classifications used in this paper is summarised in Table 1.

Table 1: Description of current and revised classifications

Classification

Current description

Description from July 2008 reference month

Comment

SITC

SITC Revision 3 or SITC R3

SITC Revision 4 or SITC R4

The actual classification has changed between R3 and R4

BEC

BEC

BEC based on HS 2007 or BEC 2007

The categories in these classifications have not changed but some detailed commodities are classified to different categories

BoPBEC

BoPBEC

BoPBEC Revision 1 or BoPBEC R1

BoPCE

BoPCE

BoPCE Revision 1 or BoPCE R1

The ABS will implement the changes to the classifications from the July 2008 reference month and the impact on time series is described in this paper.

The previous information paper described, in general terms, the expected impact of the classification changes. It was anticipated that the impact would not be significant on the broader classifications of BEC, BoPBEC and BoPCE. While this remains generally true for BoPBEC and BoPCE, analysis has shown that the impact on BEC is larger than anticipated.

The classifications contain a varying degree of detail (e.g. SITC R4 has almost 3,000 basic headings) and therefore this paper can only provide a broad summary of the impacts and highlight the largest impacts at the more detailed classification levels. Clients interested in the impact of the changes on specific areas should undertake their own analysis using the data described in the next section.

The AHECC and Custom tariff correspondences have been updated from those in the datacube released with the previous information paper. There have been some improvements to the correspondences since the previous release.

In addition, five-digit SITC exports and imports data (on a recorded trade basis) for both SITC R3 and SITC R4 will be available for 2005-06 and 2006-07 from the release of estimates for the July 2008 reference month. These data will be available on a 'user pays' basis. For more information contact the ABS National Information and Referral Service by emailing client.services@abs.gov.au or ringing 1300 135 070.

Statistics on the export and import of goods are presented on two bases - recorded trade and balance of payments. The use of the various classifications and the impact on time series is broadly summarised in the following table.

Table 2: Classifications used in trade statistics and impact on time series of changes from July 2008 reference month

Exports

Imports

Basis

Classification

Impact on time series

Classification

Impact on time series

Recorded trade

SITC

Break in series but 2005-06 and 2006-07 financial years available for both old and new classifications

SITC

Break in series but 2005-06 and 2006-07 financial years available for both old and new classifications

BEC

Break in series but 2005-06 and 2006-07 financial years available for both old and new classifications

BEC

Break in series but 2005-06 and 2006-07 financial years available for both old and new classifications

BoPBEC

Break in series between June and July 2005 reference months

Balance of Payments

BoPCE

Time series to be maintained

BoPBEC

Time series to be maintained

SITC

Impact to be advised

There will be a break in series for statistics on a recorded trade basis presented according to each of the impacted classifications. To allow clients to analyse the effect of the changes, data will be available for 2005-06 and 2006-07 on both a current and new basis for SITC and BEC. From the July 2008 reference month data will only be available on the basis of the new classifications.

For recorded trade, imports data are currently available on a BoPBEC basis. From the July 2008 reference month, data on a BoPBEC R1 basis will be available for the 2005-06 to 2007-08 financial years. This means that the break in series will be between the June and July 2005 reference months. The level of the break on the BoPBEC recorded trade series is similar to the impact on the related balance of payments BoPBEC series.

For balance of payments statistics presented according to BoPCE (exports) and BoPBEC (imports), the time series will be maintained so that the introduction of SITC R4 does not have an observable impact on seasonally adjusted series. The impacts have been measured over recent financial years and data will be revised, possibly back to July 1971. This will require the modelling of data for the earlier periods although the impact on individual series will vary. Final details of the impact on balance of payments time series (including chain volume measures and implicit price deflators) will be described in the July 2008 issue of International Trade in Goods and Services, Australia (cat. no. 5368.0) and the September quarter 2008 issue of Balance of Payments and International Investment Position, Australia (cat. no. 5302.0).

Balance of payments exports chain volume measures and implicit price deflators are presented according to SITC (one and two-digit). Details of the impact on these series will be described in the September quarter 2008 issue of Balance of Payments and International Investment Position, Australia (cat. no. 5302.0).

A list of all the available SITC, BEC, BoPBEC and BoPCE merchandise trade and balance of payment series was provided in an attachment to the previous information paper.

SITC R4 retains the overall structure of SITC R3 and consists of the same number of sections (one-digit) and divisions (two-digit). At the group level (three-digit) there is one additional code (SITC 599 'Residual products of the chemical or allied industries, nes; municipal waste; sewage sludge; other wastes'). Changes also occur at the level of subgroups (four-digit) and basic headings (five-digit). In some cases a change at the basic heading level can impact on the scope of one or more sections, divisions or groups.

In addition, the free standing descriptors which are presented to help clients interpret the detailed data have been reviewed. Changes have been made to these descriptors to reflect SITC R4, correct past errors and improve clarity.

The introduction of SITC R4 results in the deletion of 247 SITC R3 basic headings and the addition of 84 basic headings. Consequently, SITC R4 contains 2,975 five-digit basic headings down from 3,138.

The United Nations Statistical Division has provided a new correspondence between the six-digit level of HS 2007 and BEC and a correspondence between SITC R4 and BEC is planned. The ABS will apply the new correspondence between the HS 2007 and BEC at the same time as SITC R4 is introduced.

The presentation of International Merchandise Trade: Confidentiality Commodity Lists (CCL) (cat. no. 5372.0.55.001) will be revised from the July 2008 reference month to include SITC R4 codes.

The two ABS classifications have the following relationship to the international classifications:

BoPCE (for exports) is defined in terms of the two-digit level of SITC with a couple of exceptions where HS 2007 detailed codes are adopted.

BoPBEC (for imports) is nominally defined in terms of both BEC and the five-digit level of SITC. However, there are numerous many-to-many relationships (e.g. commodities in a particular SITC item can be classified to either Consumption or Capital goods in BoPBEC).

The correspondences for these ABS classifications have been updated to reflect SITC R4.

The impact of SITC R4 on exports on a recorded trade basis is summarised in Table 3.

Table 3: Summary of impact on Recorded Trade SITC Exports

SITC R3 codes(No.)

Codes impacted by SITC R4, 2006-07(No.)

Summary of impact on codes

Sections (1-digit)

10

5 of 10

4 codes impacted by less than 1% of their SITC R3 valueLargest impact is $51m

Divisions (2-digit)

67

18 of 67

6 codes impacted by more than $1k but less than $1m 7 codes impacted by more than $1m but less than $10m5 codes impacted by more than $10mLargest impact is $51m in two codes. These are the only codes with an impact greater than 1%

Groups (3-digit)

263

40 of 264

16 codes impacted by more than $1k but less than $1m15 codes impacted by more than $1m but less than $10m4 codes impacted by more than $10m but less than $50m5 codes impacted by more than $50mLargest impact is $138m20 codes have an impact greater than 1%

At the one-digit level of SITC, the largest net impacts on exports are to sections 4 and 5 which offset each other. SITC section 4 'Animal and vegetables oils, fats and waxes' decreased by $43m (14%) in 2005-06 and by $51m (14%) in 2006-07, on the other hand SITC section 5 'Chemicals and related products nes' increased by the same amounts ($43m in 2005-06, $51m in 2006-07). This represented only 1% of the estimate for section 5 in each year.

The same commodities also resulted in the largest net impact at the two-digit level. For 2006-07 SITC division 43 'Animal and vegetable fats and oils, processed; waxes of animal or vegetable origin; inedible mixtures or preparations of animal or vegetable fats or oils, nes' decreased by $51m (77%) offset by an increase in SITC division 51 'Organic chemicals' of $51m (47%). This change can be attributed to the move of all the HS 2007 six-digit codes under the five-digit code 38231 from SITC R3 basic heading 43131 'Fatty acids; acid oils from refining' to SITC R4 basic heading 51218 'Industrial monocarboxylic fatty acids; acids oils from refining'.

The next largest increase at the one-digit level was to section 8 'Miscellaneous manufactured articles' which increased by $19m in 2005-06 and $16m in 2006-07. In both years the increases were offset by a decrease mostly in section 7 'Machinery and transport equipment' with a smaller offset in section 6 'Manufactured goods classified chiefly by material'. In percentage terms, each of these changes accounts for less than 1% of each section.

The remaining changes to exports at the two-digit level of SITC represent 1% or less of the affected codes.

A time series of the sections with the largest impacts on exports is shown in Graphs 1 and 2.

Graph 1

Graph 2

The largest impacts on exports at the 3-digit level of SITC are shown in Appendix 1.

SITC imports

The impact of SITC R4 on imports on a recorded trade basis is summarised in Table 4.

Table 4: Summary of impact on Recorded Trade SITC Imports

SITC R3 codes

(No.)

Codes impacted by SITC R4, 2006-07(No.)

Summary of impact on codes

Sections (1-digit)

10

6 of 10

1 code impacted by more than $1k but less than $1m of its SITC R3 value3 codes impacted by more than $1m but less than $10m2 codes impacted by more than $50mLargest impact is $58m followed by $56m1 code impacted by 1%, all other impacts less than 1%

Divisions (2-digit)

67

21 of 67

8 codes impacted by more than $1k but less than $1m7 codes impacted by more than $1m but less than $10m2 codes impacted by more than $10m but less than $50m4 codes impacted by more than $50m Largest impact is $104m followed by $98m1 code impacted by more than 1%, with 4 codes impacted by 1%

Groups (3-digit)

263

44 of 264

19 codes impacted by less than $1m12 codes impacted by more than $1m but less than $10m7 codes impacted by more than $10m but less than $100m6 codes impacted by more than $100m with 5 of these more than $500mLargest impact is $1191m, followed by $829m, then $696m18 codes have an impact greater than 1%

The largest net impact on the SITC one-digit import series is to section 8 'Miscellaneous manufactured articles' which increased by $43m in 2005-06 and $58m in 2006-07. This is offset by a decrease mostly in section 7 'Machinery and transport equipment' with the remainder offset in section 6 'Manufactured goods classified chiefly by material'. In percentage terms this represents less than 1% of the estimate for these sections.

Also at the one-digit level of SITC, section 4 'Animal and vegetables oils, fats and waxes' decreased by $7m (1%) in 2006-07, with a compensating increase in SITC section 5 'Chemicals and related products nes'.

A time series of the sections with the largest impacts on imports is shown in Graphs 3 and 4.

Graph 3

Graph 4

The largest net movement at the two-digit level of SITC is in division 75 'Office machines and automatic data processing machines' with an increase of $320m (4%) in 2005-06 and decrease of $98m (1%) in 2006-07. This is offset by movements in SITC division 76 'Telecommunications and sound recording and reproducing apparatus and equipment'. These movements include commodities such as inkjet printers, fax machines, office machines that perform two or more functions, copy machines and teleprinters. The impact on SITC division 75 is shown in Graph 5.

Graph 5

The largest impacts on imports at the 3-digit level of SITC are shown in Appendix 2.

BEC exports and imports

For recorded trade exports, 16 of the 19 BEC three-digit categories are impacted by the introduction of BEC 2007. However only four of these represent an impact greater than 5%. In dollar terms, nine of the categories had a change of over $100m in 2006-07.

The largest dollar net impact on the export series of BEC is a $484m (4%) decrease to code 122 'Processed food and beverages mainly for household consumption'. In percentage terms the largest movement is in code 112 'Primary foods and beverages mainly for household consumption' with a $338m (18%) increase, along with code 620 'Semi-durable consumer goods nes' with a $223m (18%) decrease.

For recorded trade imports, 17 of the 19 BEC three-digit categories are impacted by the introduction of BEC 2007. However, only three of these represent an impact greater than 5%. In dollar terms, seven of the categories had movements of over $100m in 2006-07.

The largest dollar impact in 2006-07 on the import series of BEC is to code 610 'Durable consumer goods nes' with a decrease of $727m (8%) followed by code 630 'Non-durable consumer goods nes' with a decrease of $497m (4%). In percentage terms the largest movement is to 210 'Primary industrial supplies nes' with a decrease of $182m (12%). These movements are offset throughout the BEC, including increases in code 220 'Processed industrial supplies nes' of $453m (1%) and code 530 'Parts and accessories for transport equipment' $440m (5%).

In 2005-06 imports BEC data, there is a movement of $40m (100%) in code 321 'Processed motor spirit'. In processing the July 2006 changes to the Harmonized Tariff, an error was corrected in correspondences between two tariff item statistical codes and the detailed SITC and BoPBEC classifications. The correspondence error is now being corrected for 2005-06.